"You may even say Seattle is underpriced if you believe Seattle is becoming a superstar city," Lawrence Yun told area brokers in Bellevue on Thursday. "Seattle is underpriced in relation to other West Coast markets."

The fact that home prices rose much faster than incomes in recent years in Seattle and elsewhere has led some market observers to predict prices will drop to bring the relationship back to historic norms.

Yun noted that dropping mortgage rates mean the same payment buys more and more house.

The percentage of income a typical family would have to pay for a typical home dropped from the low 20s in 1990 to the high teens through the early 2000s and has returned to the low- to mid-20s, according to Yun.

Yun's "superstar" comment echoed his assertion at the National Association of Realtors annual conference in Las Vegas in November that Seattle might be joining the ranks of cities in which housing prices shed their typical relationship to incomes.

"No one is moving to Cleveland," Yun said Thursday. "(Seattle) is an attractive area. People want to move here."

Down from a recent high of $481,000 in July, the median King County house sold last month fetched $435,000, up from $429,495 in January 2006, according to the Northwest Multiple Listing Service. January's house sales volume was off nearly 31 percent from a year earlier, whereas the number of houses on the market jumped almost 56 percent.

Some economists have predicted the area's home prices will fall as much as 5 percent from their peak.

Also Thursday, the founder of the Four Seasons Hotels and Resorts said Seattle has become a "World Class" city.

Sharp praised the city's people, businesses and setting and said the business, education and arts communities "have worked together to round out what a city can offer to its permanent residents as well as people who visit."

Developer Seattle Hotel Group is building a 149-room Four Seasons Hotel topped by 36 condos on First Avenue, just south of Pike Place Market. The developer has sold 24 of the 36 condos, whose prices range from $2 million to more than $10 million, and expects to finish the project in late summer or early fall.

The Four Seasons has its own niche among the slew of condo, hotel and hotel-condo projects under development downtown, because it's small and high-end, Sharp said. But he also said so many people were building because they saw an opportunity and dismissed the idea that downtown might be approaching saturation.

"I think when a city starts growing, it keeps doing that, particularly when the political support is there," he said.

Yun predicted home sales nationwide would improve this year from a slow 2007, with sales and prices picking up in 2009.

The subprime mortgage meltdown, and associated foreclosures, had a big effect on Wall Street investors but amounted to a small percentage of the housing market in most places, with Washington's effect particularly small, Yun said.

And mortgage interest rates are at lows not seen since the 1960s, except for a few months in 2004, he said. "It's a once-in-a-lifetime opportunity in terms of interest rates."

Housing sales have scaled back to normal levels from the "excessive boom" of 2003 through 2006 and have stabilized, Yun said.

"We are probably scratching the bottom in terms of home sales activity."

But Yun noted that the market depends on fence-sitting potential buyers who are afraid of jumping into a market in which prices might continue to fall.